“In this world,” wrote Ben Franklin, “nothing can be said to be certain except death and taxes.”
On April 15, as the filing deadline closed in, millions of Americans were frantically confronting that latter (but hopefully not former) inevitability.
Let’s be blunt: paying taxes sucks. After all, that’s your hard-earned cash siphoned out of every paycheck. And for what, exactly? Where does it all go? And what do you get in return? It’s not like the IRS gives you an explanation of how your precious dollars are being spent.
Fortunately, a bunch of neat web apps allow you to create a personalized tax receipt showing an itemized list of exactly which federal programs and services your tax dollars are funding.
It’s information that likely won’t make paying taxes any less painful, but at least it’ll shed a little light on what it is you’re actually paying for. And, if it’s any consolation, keep in mind that U.S. taxpayers on average pay significantly lower taxes than citizens in nearly every other wealthy nation in the world, according to the Center on Budget and Policy Priorities.
The Big Picture
Roughly 80 percent of all federal tax revenue comes directly from our paychecks, through income taxes and payroll taxes. In fiscal year 2014, the federal government spent $3.5 trillion (that’s with 12 zeros), according to the CBPP. Of that, more than $3 trillion was financed by federal revenues (aka, our taxes). The remaining amount (about $485 billion) came from borrowing.
The three biggest areas of spending together accounted for about two-thirds of the entire federal budget:
1. Social Security (24 percent, or $851 billion), providing monthly retirement benefits to 39 million retirees, 8.4 million of their spouses and children, and 10.9 million disabled workers and eligible dependents.
2. Four health insurances programs (24 percent, or $836 billion), including Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and Affordable Care Act marketplace subsidies. Medicare, which provides health coverage to around 54 million people who are over the age of 65 or have disabilities, accounted for nearly two-thirds of this amount.
3. Defense spending (18 percent, or $615 billion), funding defense and security-related international activities.
Drilling Down on Income Tax
Tax day is all about the individual income taxes you have to pay the government by April 15. These are the taxes on income from work, investments and other earnings. Income taxes collectively make up nearly half of all federal revenue, according to the National Priorities Project, a nonpartisan federal budget research group. They fund government programs and services that are not paid for by trust funds like Social Security and Medical, which are covered by payroll taxes,
Click the image at right to explore NPP’s interactive tax receipt. Enter the amount of federal tax you paid to see an itemized list of where that money was spent in fiscal year 2014. You can also view the tax receipt for your own specific state. This estimation includes income tax only, not trust funds generated from sources like payroll taxes that can only be used for specific programs such as Social Security and Medicare. NPP uses projected federal fund “outlays” for fiscal year 2014 as reported by the White House Office of Management and Budget’s (OMB) Public Budget Database, released in February 2015.
The White House also produced its own interactive tax calculator. Although it uses the same source for its budget estimates, the specific breakdown differs slightly from NPP’s version. The discrepancies are presumably due to overlapping government programs and varied interpretations of which areas those programs should be categorized under. Categorical definitions are listed below the interactive.
National Defense
Spending on military personnel, operations, procurement, and other activities critical to our national defense.
(corresponds to budget function 050)
Health Care
Spending on Medicare Supplementary Medical Insurance and the prescription drug benefit, Medicaid, the Children’s Health Insurance Program, food safety, disease control, and other health care activities. Excludes spending from Medicare taxes. Military health care is included under “National Defense,” and health care for veterans is included under “Veterans Benefits.”
(corresponds to budget functions 550 and 570)
Job and Family Security
Spending on unemployment insurance, food assistance, relevant tax credits, and other programs designed for income security. Excludes spending from unemployment insurance taxes.
(corresponds to budget function 600)
Education and Job Training
Spending on financial aid, special education, job training, and other educational and job activities.
(corresponds to budget function 500)
Veterans Benefits
Spending on benefits for veterans, including health care, disability compensation, pension, education, and home loans.
(corresponds to budget function 700)
Natural Resources, Energy, and Environment
Spending on water management, energy supply, pollution control, and other activities related to natural resources, energy, and the environment.
(corresponds to budget functions 270 and 300)
International Affairs
Spending on embassies, exchange activities, humanitarian assistance, and other activities related to international affairs.
(corresponds to budget function 150)
Science, Space, and Technology Programs
Spending on general science, basic research, and space flight.
(corresponds to budget function 250)
Immigration, Law Enforcement, and Administration of Justice
Spending on border security, immigration, enforcement, litigation, the federal judiciary, and other activities related to the administration of justice.
(corresponds to budget function 750)
Agriculture
Spending on agricultural activities, including research, crop insurance, and agricultural subsidies.
(corresponds to budget function 350)
Community, Area, and Regional Development
Spending on activities to strengthen communities, including the Community Development Fund. Other major accounts are Operation of Indian Programs, the Neighborhood Stabilization Program, and the Rural Water and Waste Disposal Program Account.
(corresponds to budget subfunctions 451 and 452)